BackDYK: Interest rates on few savings schemes have been revised
Rates applicable on small savings schemes are usually reset at the start of each FY
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Interest rates applicable on small savings schemes are usually reset by the government at the start of each financial year (FY). This year, too, rates have been revised for two products, effective 1 April 2015—Sukanya Samriddhi Account and Senior Citizens Savings’ Scheme.
Sukanya Samriddhi Account
Interest rate on the newly introduced Sukanya Samriddhi Account has been raised from 9.1% to 9.2% per annum for 2015-16 (FY16). This scheme is meant only for a girl child. A guardian can open one account in the name of one girl child, for a maximum of two girls. Also, the age of the girl child should be less than 10 years at the time of opening the account. A minimum of 1,000 needs to be deposited every FY in each account, and the maximum deposit is capped at 1.5 lakh a year. You can open this account with a post office and 28 specific banks, which have been recently notified by the Reserve Bank of India. The scheme matures when the child turns 21 years old. However, one can make a partial withdrawal up to 50% of the balance as on last date of previous financial year, after the girl attains the age of 18. A premature closure can be done in case the child’s age is more than 18 years and she gets married.
Senior Citizens Savings’ Scheme
The other scheme for which the interest rate has been raised for FY16 is Senior Citizens Savings’ Scheme (SCSS). The rate has been raised from 9.2%, which was applicable in FY15, to 9.3% for FY16. This scheme is for people above the age of 60 years. You can open an account initially for a period of five years. More than one account can be opened in any post office, but the maximum amount of investment that you can make is 15 lakh, adding investments in all the accounts. You can also open a joint account with your spouse, but the first depositor in a joint account is considered as the investor.
For SCSS accounts, quarterly interest is payable on the first working day of April, July, October and January.
Premature closure is allowed after one year, and after a deduction of an amount equal to 1.5% of the deposit and after two years after deduction of 1%. After maturity, the account can be extended for three years but this has to be done within one year of maturity. In cases where the account has been extended, it can be closed at any time after expiry of one year of extension without any deduction. Tax is deducted at source on interest if it is more than 10,000 per annum.
Other schemes
Interest rate on other small savings schemes, such as five-year time deposit, remains unchanged at 8.5% per annum for the new FY as well. Interest rate for post office monthly income scheme remains at 8.4%. The 5- and 10-year National Savings Certificate will continue to provide 8.4% and 8.8% return, respectively. Public Provident Fund and Kisan Vikas Patra will also continue to earn 8.7% per annum for this year.
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